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A liquidity trap is a situation, described in Keynesian economics, in which, "after the rate of interest has fallen to a certain level, liquidity preference may become virtually absolute in the sense that almost everyone prefers holding cash rather than holding a debt ( financial instrument) which yields so low a rate of interest." [1]
Zero lower bound. The zero lower bound ( ZLB) or zero nominal lower bound ( ZNLB) is a macroeconomic problem that occurs when the short-term nominal interest rate is at or near zero, causing a liquidity trap and limiting the central bank's capacity to stimulate economic growth. The root cause of the ZLB is the issuance of paper currency by ...
Helicopter money. Helicopter money is a proposed unconventional monetary policy, sometimes suggested as an alternative to quantitative easing (QE) when the economy is in a liquidity trap (when interest rates near zero and the economy remains in recession ). Although the original idea of helicopter money describes central banks making payments ...
Liquidity is an attribute to an asset. The more quickly an asset is converted into money the more liquid it is said to be. According to Keynes, demand for liquidity is determined by three motives: the transactions motive: people prefer to have liquidity to assure basic transactions, for their income is not constantly available.
t. e. In economics, crowding out is a phenomenon that occurs when increased government involvement in a sector of the market economy substantially affects the remainder of the market, either on the supply or demand side of the market. One type frequently discussed is when expansionary fiscal policy reduces investment spending by the private sector.
The liquidity trap. The liquidity trap is a phenomenon that may impede the effectiveness of monetary policies in reducing unemployment. Economists generally think the rate of interest will not fall below a certain limit, often seen as zero or a slightly negative number.
Chapter 3 "Japan's trap" Krugman uses the liquidity trap in 1990s Japan to signal the return of depression economics. Krugman suggests that despite Japan being the second largest economy at the time, and a creditor nation, financial liberalisation, and deregulation in the 1980s led to deflation and a recession. Krugman identifies the stagnant ...
A U.S. judge has blocked a Department of Labor rule from taking effect that would have expanded the types of retirement advisers who are considered fiduciaries, finding the rule was arbitrary and ...